Starting a farm or ranch is a huge investment. The farmer will need to invest in the land, machinery, and farm products. All these may be too much for the entrepreneur and this is why there is a need for farm or ranch loans. Fortunately, some institutions offer loans to farmers. These loans can be beneficial, but it takes standard procedures for them to be accessible.
How to Get a Farm Loan
The procedure for accessing farm loans depends on the history of the farmer. Old farmers find it easier to obtain funds for their farms than new farmers. Just like every institution, people who do not have track records have a hard time qualifying for loans.
There are underlying standard procedures for accessing a loan, whether you are a new or old farmer. Before you apply for a farm or ranch loan, consider the following.
1. Know your goals and starting size.
You should be able to answer the following questions before you start applying for a loan.
- Your budget for the farm or ranch.
You should at least have an estimate of the amount that will be involved in starting your farm project. This will mean that you need to investigate and know the cost of the machinery and other things that you will need.
- The bank will also ask you if you have land facilities available.
- They will also want to know if you already have demands for your products. If your answer to this question is yes, you should be able to demonstrate or have proof to show.
- They will also want to know about your financial goals.
2. Marketing or sales plan
They also want to know what your plans are in terms of marketing your products. Do you have a target market? How reliable is that market? They want to make sure that you can pay back the loan before they offer it to you. It is, therefore, essential to start a customer relationship even before you start planting your crops. You will get to know the customers’ preferences so that you can easily meet them.
3. Find a lender
You can approach government lending agencies, private agencies, and even friends or family members who can offer loans. Before approaching a lender, you need to get the following information.
- Have information on the exact use of the fund you want to access.
- Income statement: This applies to farmers who already have farms. The income statement will show the profits or losses you have had in the past year.
- Balance sheet: This will reflect the assets and liabilities you have in the farm business.
- Credit history: You will need to provide a credit report.
- The lender will also request proof of insurance before offering you a loan.
Paying attention to all the requirements mentioned above will make it easier for farmers to access farm or ranch loans. Speaking of lenders, one lender that offers a wide variety of farm loans with ease is the United Farm Mortgage. To learn more visit: https://unitedfarmmortgage.com